Clean up young adult credit from parent use
September 6, 2024 12:51 PM   Subscribe

How can a young adult clean up a credit record that was damaged by their parent, but without incriminating the parent? A young adult I know has old internet/cable and electricity bills on their credit report that were opened by their parent. Not sure how old, but assume more than five years old. Obvs this is impacting their ability to build and use credit. How can the young adult fix their credit without incriminating their parent?

I’m not interested in moralizing, so if you think this is unequivocally, criminally wrong, please keep scrolling. This is about poor people trying to manage limited resources, and a child’s social will do to open utility accounts. The practice ended years ago when the parents found better employment.

Without filing a stolen identity/fraud report or calling the police, how can the young adult repair their credit? I’ll take links if you’ve got them. And thank you.
posted by toodleydoodley to Work & Money (20 answers total)
 
Is it just the bills on there, or has the young adult's credit been dinged by those bills going unpaid?

If the former, leaving it lie should be fine, and might even help the young adult's score.
posted by humbug at 1:05 PM on September 6, 2024


The slow way is to get a credit card (maybe another adult can be involved). Put a recurring bill on it like a phone bill or small online sunscription, and set up an automated payment to pay it off in full religiously, a few days before it's due every month. Don't use it for spending and don't carry any balance on it.

Every time they offer to increase the credit limit, always say yes. The goal is to amass as much "available credit" as possible... and have a proportionately low amount of debt on it (by paying off the balance every month). This will build back credit slowly. Hope there's a fast way too.
posted by nouvelle-personne at 1:05 PM on September 6, 2024 [6 favorites]


This might be wrong in a US context but if these are debt, have they been written off? If not, negotiating and paying them might help.
posted by warriorqueen at 1:07 PM on September 6, 2024


How many years to go before this falls off their credit report entirely? 7 years is the max. So if it has been "years" since the old debts were racked up, maybe this young person does not have long to wait. Debts become uncollectable after 4 years so there may also be no need to pay it off.

In the meantime, advise the young person to open a couple of credit card accounts and start paying them off in full every single month. 2-3 years of this usually causes the influence of old debts on one's credit score to be recouped.
posted by MiraK at 1:31 PM on September 6, 2024 [3 favorites]


Can you clarify if the issue is debts that still exist, or debts that were paid off at some point in the past (if so, when?), utilities that are still being charged monthly to the card, or something else?
posted by trig at 1:32 PM on September 6, 2024 [3 favorites]


Along with what nouvelle-personne said, get a credit card with no annual fees, and don't use and, hold it a long time. And just wait. Age and debts rolling off will help the most.
posted by The_Vegetables at 1:40 PM on September 6, 2024 [3 favorites]


Best answer: In this case filing a "this is not my debt" report with the credit reporting agencies may be effective. Depending on the person's age it should be pretty clear that the debt is an incorrect line on the credit report. Do not go into explanations of parents using the kid's name, etc., just say, this is not my debt, I was 7 years old in the year the debt was opened, or just a simple 'I do not recognize this debt'. This puts the onus on the credit reporting agency and the debt holder to prove the debt is valid and should remain on the report.

(For all the "wait until it falls off" people: the date it falls off the report is X years after the lender stopped trying to collect the debt. If they send you a new letter to whatever address they think belongs to the debtor as a reminder to pay the bill, the clock resets to zero years).

If the debts are actually valid somehow -- I opened an account with a credit union and they have "tricks" through how accounts are set up with them to help build credit, which may be a better place to look into than a predatory credit card that would accept someone with bad debts on their report.
posted by AzraelBrown at 1:44 PM on September 6, 2024 [6 favorites]


Response by poster: Thanks all for your responses.

I don’t know the age of the debts but I believe some may be more than 7 or even 10 years old. The debts were unpaid, which is why they’re damaging the YA’s credit. I have advised the YA not to take any action or contact the creditors bc as some of you said, that will set the time tolling again. Paying the debts is not an option for anybody.

The YA has tried to get a small line credit card but are unable to get even that, bc poor & young with bad credit. I’m not sure I understand how getting a credit card and not using it will help. When I do that, the issuer gets mad about not making enough in interest and cancels the card.

I have advised them to get a secured (pay first) credit card through their credit union, and they have decided to do that, but at the moment, do not have any uncommitted money (bc, you know, poverty).

Thank you for the advice regarding a “this is not my debt” filing, without naming a specific debtor. I will try that as well.
posted by toodleydoodley at 1:57 PM on September 6, 2024


A point here:

I’m not sure I understand how getting a credit card and not using it will help. When I do that, the issuer gets mad about not making enough in interest and cancels the card.

Yeah, I'm not sure about the not-using-at-all thing either. However, I've often heard it recommended (by a financial counselor I went to, and by the mortgage broker I briefly worked for) that you can improve your credit slowly by getting a credit card and using it for the pocket-money kinds of things you were going to use a debit card for anyway, provided you pay it off regularly. I did something similar when I finally paid off my credit card debt on two cards - I kept both cards, and signed up for auto-payment of some basic bills for them, one for each, and never used them for anything else.

Most banks don't really care how frequently you use it - all they care about is "do you pay off what you charge to it? You do? Good." It doesn't matter if all you charge to it is five bucks for a magazine - if you paid it off on time, that's all they care about.

The secured card will likely be a good first step.
posted by EmpressCallipygos at 2:05 PM on September 6, 2024 [1 favorite]


Best answer: I’m not sure I understand how getting a credit card and not using it will help. When I do that, the issuer gets mad about not making enough in interest and cancels the card.

I'm not sure why the advice to not use it at all (though I can definitely understand any advice to use credit very little at first, and only for things they can absolutely pay off each month). But getting a line of credit earlier rather than later is (eventually) helpful because the age of your credit lines is taken into account when calculating your score. So ideally you want something you can keep open for many years, even if you only use it minimally (maybe because the rates aren't great).
posted by trig at 2:19 PM on September 6, 2024 [1 favorite]


Best answer: Also if your friend gets a credit card, make sure they know about setting up automatic monthly payments from their bank account so they don't accidentally forget or otherwise miss a payment. And recommend they get into the habit of checking all their accounts frequently - it's easy to let it slip and not stay on top of things.
posted by trig at 2:22 PM on September 6, 2024 [1 favorite]


I’m not sure I understand how getting a credit card and not using it will help. When I do that, the issuer gets mad about not making enough in interest and cancels the card.

Really? I'm 47 and I've never had a card cancelled due to non-use. I've had most of mine since I was 18. I've not used the one paid by my work since 2019. Another I use once a year, at most to pay for my car inspection fees because they don't take my other one.
Fine, use it once a year.

Also you shouldn't use it because the ratio of balance to credit availability is really important, so for young people a credit limit of $500 (or only slightly more) will lead to bad ratios if you use it much.
posted by The_Vegetables at 2:26 PM on September 6, 2024 [2 favorites]


Store cards do this; I've lost credit cards from a major clothing store and furniture store due to non-use (who buys major furniture more than once a year??). The companies who back these cards (Visa, etc.) don't want to keep track of these pittances.
posted by Melismata at 2:40 PM on September 6, 2024 [4 favorites]


I didn't say not to use the card, you SHOULD use it. But not for discretionary random spending where the kid is risking running up a big bill of "easy money". The standard advice is what I said above - Put a recurring bill on it like a phone bill or small online subscription, and set up an automated payment to pay it off in full religiously, a few days before it's due every month. Don't use it for (random) spending and don't carry any balance on it.
posted by nouvelle-personne at 3:06 PM on September 6, 2024 [1 favorite]


If the debts are 7-10 years old, they should be off the credit report, unless the creditor actually went to court and got a judgment against them. So I think your first step should be to get a copy of that report (for free, at annualcreditreport.com) and go through it to see what is actually going on here. Especially you want to make sure that the third party is not still pulling this!

(For all the "wait until it falls off" people: the date it falls off the report is X years after the lender stopped trying to collect the debt. If they send you a new letter to whatever address they think belongs to the debtor as a reminder to pay the bill, the clock resets to zero years).

Not true. The seven years runs from the missed payment.
posted by praemunire at 3:11 PM on September 6, 2024 [4 favorites]


Best answer: Have they gotten a recent copy of the their credit report? You can get a free copy from each of the three different credit reporting agency once a year per agency. So you can do all three at the same time to find all of the problems or you do a different one every four months if you want to track changes over time (recognizing that there might be slight differences between the reports)
The link for this is https://www.annualcreditreport.com/ Be careful because there are other websites with similar names - this is the one with the government mandate.

Here is the Federal Trade Commission website describing this service. Apparently there is a current program at the same annualcreditreport.com website that lets you check your credit report weekly for all three agencies.
posted by metahawk at 3:25 PM on September 6, 2024 [4 favorites]


Just a note—I just had my bank send me a warning that an unused credit card would be cancelled and I needed to make a purchase to keep it active. Bought a sandwich, paid it back to zero. So it does happen.
posted by greta simone at 3:38 PM on September 6, 2024 [2 favorites]


In my experience: if you just totally never use a card for, like, a year, yeah it might get closed. But if you use it a little bit and/or pay it off every month, that is fine.

Source: I have had two credit cards since 2007 & with very rare exceptions have paid them off every month completely, so they don’t get interest $ from me. My credit card company (Chase, ugh/sigh) has never indicated the slightest displeasure about this, and in fact has increased my credit limit periodically over the years.

Before that I had a different card & I stopped using it when I got the new ones and yeah, eventually the company canceled it.
posted by needs more cowbell at 5:58 PM on September 6, 2024 [1 favorite]


Best answer: If your friend can save up $600, they can try approach the bank and asking for a secured credit card that locks $600 in the back account in exchange for $500 in debt. Once they have built the credit, they can ask the secured amount to be removed.

I would also respond that this isn’t their credit and they don’t recognize it and were x years old.
posted by shockpoppet at 7:30 PM on September 6, 2024 [1 favorite]


Response by poster: Thanks all for your thoughtful responses. I will advise the YA to order a current credit report, contest the charges that are not theirs, and save to open a secured cars with their bank, and use that to pay their phone bill, paying it off monthly. Appreciate everyone’s labor
posted by toodleydoodley at 12:21 PM on September 7, 2024 [1 favorite]


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